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Wednesday, July 17, 2019  Spokane, Washington  Est. May 19, 1883
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News >  Washington

Farmers, state watching for signs export markets will reopen

UPDATED: Mon., Dec. 10, 2018, 10:47 a.m.

Jordan Green drives a combine while harvesting wheat on Wednesday, Aug. 30, 2017, near Fairfield, Wash. Like the rest of Washington’s agricultural sector, wheat growers are watching closely to see if negotiations with trade partners can ease some of the impacts from the ongoing trade war. (Tyler Tjomsland / The Spokesman-Review)
Jordan Green drives a combine while harvesting wheat on Wednesday, Aug. 30, 2017, near Fairfield, Wash. Like the rest of Washington’s agricultural sector, wheat growers are watching closely to see if negotiations with trade partners can ease some of the impacts from the ongoing trade war. (Tyler Tjomsland / The Spokesman-Review)

With more than $1 billion in Washington agricultural exports on the line, farmers and commodity groups are watching closely to see if negotiations between the United States and China will lead to a major shift in the tariff war.

Beginning in April, a series of tariffs announced by the Trump administration, followed by retaliatory measures by China and other countries, has caused disruptions in exports, including cherries, apples, wheat, dairy products and seafood. But most commodities are in the middle of their marketing cycle, so hard data on any losses are hard to come by and some sales affected early in the year could recover if conditions change.

Right now, the Washington Apple Commission knows the sale of Washington apples to its overseas customers is down 28 percent overall, said Toni Lynn Adams, the commission’s coordinator for communications and outreach.

That includes a drop of 25 percent to the state’s biggest foreign customer, Mexico, which placed additional tariffs of between 15 percent and 25 percent on some American farm products in response to U.S. tariffs on imported steel and aluminum. Sales to China, the state’s sixth-largest customer, are down 33 percent, after two rounds of retaliatory tariffs, the first for steel and aluminum imports and the second for penalties on theft of intellectual property.

Red Delicious apples snake their way through an elaborate sorting and packing system on Friday, May 5, 2017, at Northern Fruit Co. in Wenatchee, Wash. (Tyler Tjomsland / The Spokesman-Review)
Red Delicious apples snake their way through an elaborate sorting and packing system on Friday, May 5, 2017, at Northern Fruit Co. in Wenatchee, Wash. (Tyler Tjomsland / The Spokesman-Review)

The biggest hit, however, is with apple sales to India, which seemed like an expanding market because China was denied access to that country’s market in 2017. But in response to the U.S. steel and aluminum tariffs, India initially proposed retaliatory tariffs of 10 percent to 25 percent on apples, chickpeas and lentils. Those tariffs, announced June 14, were scheduled to take effect in one month, but in July were delayed until Aug. 4, and then until September, and now until Dec. 17. They could be delayed again.

But sales of apples to India have dropped 83 percent on the threat of tariffs, as there was a rush to purchase apples to beat the first tariff, followed by a glut of apples that led to falling prices when the tariffs weren’t applied.

“This is the effect of an implied tariff,” Adams said.

Estimating the cost of tariffs in the overall agriculture picture is difficult because many things can affect a farmer’s bottom line. For example, this year’s apple crop, at about 117 million 40-pound boxes, is smaller than last year’s crop of 133 million boxes, and a smaller crop can drive prices up. The 2018 apple crop can remain in storage until late summer, so an increase in sales next year can mitigate lower sales now.

“It’s an ever-changing situation,” Adams said.

China – which last year was the fifth-largest importer of Washington wheat – bought some 275,000 metric tons of soft white wheat from the Pacific Northwest in 2017, about half of it coming from Washington. As soon as talk of tariffs surfaced in the spring, “they haven’t bought any,” said Glen Squires, chief executive officer of the Washington Grain Commission.

Soft white winter wheat stands ready for harvest in the Spring Valley area northeast of Walla Walla Washington Friday July 25, 2008. Washington wheat farmers say they are concerned about cuts to farm insurance in President Donald Trump’s proposed budget. (Christopher Anderson / The Spokesman-Review)
Soft white winter wheat stands ready for harvest in the Spring Valley area northeast of Walla Walla Washington Friday July 25, 2008. Washington wheat farmers say they are concerned about cuts to farm insurance in President Donald Trump’s proposed budget. (Christopher Anderson / The Spokesman-Review)

Wheat farmers are watching closely as talk of new negotiations with China continues, but they don’t know how much it will help, Squires said. If tariffs go up or stay the same, the Chinese can’t buy any less than the nothing they are buying now. But if tariffs go down, they don’t know what will happen, because the Chinese are sitting on big stockpiles of their own wheat from subsidizing their own farmers.

In the meantime, the federal assistance promised to help farmers hit by tariffs has been slow coming. Although the federal government originally announced subsidies of 14 cents per bushel, that has been changed to 7 cents per bushel now and the other 7 cents if tariffs aren’t lifted.

Some farmers haven’t received any payments yet, Squires said. The U.S. Department of Agriculture also is taking proposals for market development and expansion to help generate new sales for the losses from tariffs. But those proposals weren’t submitted until November and decisions aren’t expected until January.

“Hopefully, this process can get sorted out, so we can get back to exporting,” Squires said. “It’s easy to lose a market. It’s really hard to get one back.”

Cherry growers don’t have the luxury of a long marketing season like apple or wheat growers, because their fruit is mostly sold fresh in the weeks after it is picked. Cherries were hit with a double tariff whammy from China this year, first in April in response to the steel and aluminum tariffs, and again on July 6 as a response to the penalties for the disputes over intellectual property rights. The combination added 50 percent to the cost of American cherries in China, just as the fruit was being picked.

File:  Antonio Alverez places a load of Chelan cherries in a flat on KP Sullivan Farms north of Pasco, Washington in this June 15, 2012 photo. Cherry growers are worried Chinese tariffs could hurt their sizable foreign market. (Richard Dickin / AP)
File: Antonio Alverez places a load of Chelan cherries in a flat on KP Sullivan Farms north of Pasco, Washington in this June 15, 2012 photo. Cherry growers are worried Chinese tariffs could hurt their sizable foreign market. (Richard Dickin / AP)

There was an effort to expand cherry sales in other foreign markets, but cherries were not originally part of the subsidies to help farmers with the tariffs. They were added later under pressure from Congress.

The Washington Department of Agriculture estimates the tariffs cost the state’s cherry industry $86 million, said Chris McGann, a department spokesman.

The list of Washington goods affected by tariffs includes more than some of the state’s best-known farm products like wheat and apples, information from the department shows.

The Chinese also placed a 25 percent tariff on fish and seafood, hay, dairy products and dried peas, and tariffs of 5 to 10 percent on frozen french fries and vegetables, and some other processed foods. Mexico has tariffs of 15 to 25 percent on frozen french fries and dairy products. Canada has 10 percent tariffs on roasted coffee, pastries, preserved beef, soups, sauces, condiments, jams and jellies. The European Union has 25 percent tariffs on dried kidney beans, cranberry juice and prepared cereal.

The prospect of an agreement in the next 90 days between the United States and China to end the tariff fight seems “tenuous at best,” McGann said.

“It’s a wait-and-see attitude at the (state) Department of Agriculture and the industry in general,” he said. “So far, it’s really light on details and heavy on hope.”

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